A newly imposed sanction, a shift in shareholder ownership, or escalating geopolitical tensions can instantly transform a trusted business partner into a significant compliance risk. As global regulations become more complex and interconnected, businesses face increasing exposure to hidden risks that traditional due diligence may overlook. From sanctions screening and ownership structures to adverse media monitoring, investigations, and reputational concerns, risk indicators now evolve faster than ever and extend far beyond financial performance. Discover how advanced Data & AI solutions help companies continuously monitor business partners without slowing growth or operations.
Compliance Risk Management: A Fundamental Shift in Business Strategy
In an environment marked by rising geopolitical instability, international sanctions, corporate fraud, and reputational threats, compliance risk management has become a critical factor in business performance and long-term resilience. The consequences of non-compliance now extend far beyond regulatory fines, frozen transactions, or cancelled contracts. Reputational damage can erode trust among customers, financial institutions, investors, and business partners, even for companies focused primarily on domestic markets.
Once considered the responsibility of legal and risk departments alone, compliance is no longer simply a control function. It has become a strategic pillar of commercial risk management, business intelligence, and informed decision-making. For modern businesses, accurately assessing customers, suppliers, and strategic partners is now essential. According to the Data & AI Barometer 2026 conducted by Coface and Les Echos Études, data protection and regulatory compliance rank as the leading concerns for 41% of the 900 decision-makers surveyed, far surpassing cost considerations or uncertainty around return on investment (24%). The urgency is clear: according to LSEG’s Global Sanctions Index, the number of sanctioned individuals worldwide has surged by 446% since 2017, with significant acceleration following the outbreak of the war in Ukraine.
The Strait of Hormuz, the Russia-Ukraine conflict, and growing US-China tensions demonstrate how geopolitical risks can rapidly disrupt global supply chains. New sanctions, changes in ownership structures, exposure to high-risk countries or sectors, and export control regulations can quickly impact even the most established business relationships. Furthermore, anti-circumvention measures and evolving international trade restrictions continue to increase regulatory complexity for organisations operating across borders.
We have entered an era where compliance risk is no longer static but profoundly dynamic.
Compliance is now at the very heart of operations: it directly affects a company’s ability to contract, provide a service, pay its counterparties, or simply maintain a commercial relationship.
- Magali Bouron, Risk & Compliance Specialist – LSEG Risk Intelligence.
Why Regulatory Compliance Requirements Continue to Intensify
Increasing regulatory scrutiny is not a new phenomenon, but its pace and scope have expanded dramatically in recent years. International sanctions represent only one component of a broader compliance framework that now includes sustainability regulations, anti-money laundering requirements, export controls, operational resilience mandates, and financial crime prevention initiatives. As regulations continue to multiply, businesses face growing pressure to strengthen compliance programmes:
- The European CS3D Directive on corporate sustainability due diligence, expected to take effect by 2029, will require large organisations to identify, assess, and manage risks throughout their entire value chain.
- US BIS export control rules, including the Affiliate Rule, target foreign subsidiaries majority-owned by sanctioned entities. For businesses, this means sanctions screening alone is no longer enough. Organisations must analyse ownership structures, corporate affiliations, product destinations, and intended end-use scenarios.
- The Anti-Money Laundering Authority (AMLA) will introduce direct inspections from 2028 onward, focusing on approximately forty financial institutions considered to present the highest levels of risk.
Companies are facing a growing number of new regulations, which also cover very different areas. But they all converge on the same requirement: knowing exactly who their counterparties are.
The challenge for a company is no longer simply to know its counterparties, but to assess the exposure of the entire chain of third parties associated with the commercial relationship, from the closest to the most distant.
- Magali Bouron - Risk & Compliance Specialist - LSEG Risk Intelligence
Why Knowing Your Counterparties Is No Longer Enough
These regulatory developments are fundamentally changing how compliance risk is assessed. Simply confirming that a company does not appear on a sanctions list no longer guarantees that it represents a low-risk business partner. An organisation can present significant compliance and reputational concerns without ever being formally sanctioned. Examples include links to politically exposed persons, control by sensitive entities, or involvement in investigations related to fraud, corruption, bribery, or money laundering.
While sanctions monitoring remains essential, relying solely on sanctions data creates blind spots. Effective third-party risk management requires combining sanctions intelligence with additional sources of business information:
- Politically Exposed Persons (PEPs);
- Complete ownership structures, including directors, shareholders, and Ultimate Beneficial Owners (UBOs);
- Financial strength and solvency indicators;
- Adverse media screening that identifies investigations, criminal associations, controversies, and serious allegations before they impact your operations.
Business decisions must absolutely incorporate a comprehensive view of the health of their business partners: creditworthiness, exposure, reputation, compliance and sanctions. This requires mapping all risks and combining systematic checks on entry with continuous monitoring of the company’s relationship ecosystem.
Beyond sanctions, compliance risk impacts the business as soon as you work with unsuitable partners, even indirectly. This can relate to minor incidents and occur within very short timeframes.
– Leeroy Aoulou – Head of Sales Enterprise– Coface Business Information France.
Stay Ahead of Risk and Make Smarter Business Decisions
From Risk Management to Business Growth: download Coface’s global study, explore the Open Advantage framework, and discover five practical strategies for balancing business protection with sustainable growth.
Contact your local Coface experts and request a personalised demonstration of the Urba360xLSEG solution.
